STRATEGIC PARTNERSHIP

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STRATEGIC PARTNERSHIP

Green Growth:

Achieving forest conservation in commercially productive landscapes in Indonesia, Liberia and Brazil

October 30, 2015

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Strategic Partnership for Green Growth 2

Table of content

Project Detail page 3

Context page 5

page 8

An IDH-NICFI Partnership page 10

The Landscapes page 12

Liberia page 15

Project location page 15

Identification of changes required page 17

Year one focus page 18

Timing of activities page 19

Organizational arrangements for project implementation page 22

Indonesia page 24

page 35 Organizational arrangements for project implementation page 30

Mato Grosso page 39

page 47 Organizational arrangements for project implementation page 51

Learning & Innovation page 52

Communication page 54

Operations and Reporting page 56

Log page 61

Risks & Page 70

page 72 page 73 Annex A: Information about the organization page 81

Annex B: page 82

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Project details, summary

Applicant name and abbreviation:

IDH, the Sustainable Trade Initiative (IDH)

Project title:

Creating deforestation-free supply chains at scale: Forging committed public private partnerships for jurisdictional and landscape approaches.

Impact Areas Addressed by the Project

Natural forests are conserved to maintain

their carbon storage capacity and

biodiversity

Cost effective and verifiable reductions in CO2 emissions

from deforestation

and forest degradation.

Sustainable development

Poverty reduction

Liberia

180,000 hectares of high conservation value

and high carbon stock forest is covered by production-protection

agreements

To be determined

Expansion of up to 35,000

hectares community

palm oil production

Improved livelihoods of smallholders in

60 communities,

benefitting 4,200 households and 21,000 household members.

Indonesia

and high carbon stock forest and 500,000 hectares of peatland

are covered by production- protection/restoration

agreements

To be determined

35,000 palm oil smallholders

in 3 landscapes

have increased productivity

by 30%.

Improved livelihoods for

20,000 community

members

Brazil

and high carbon stock forest is covered by production-protection

agreements

50,000 hectares of riparian area

replanted

Intensification of up to

35,000 hectares of small holder cattle land

Improved livelihoods of

smallholders benefitting

1,000 households

Main thematic area:

I) Deforestation-free Commodity Supply Chains and Green Growth III) Improved Transparency, Governance and Legality

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Annual budget:

50million NOK

Main target group:

- Private sector corporations;

- Smallholder producers;

- Local and provincial governments;

- Local and indigenous communities;

Country of implementation Geographic area

Liberia Western palm oil landscape

Eastern palm oil landscape Northern mining landscape

Indonesia Aceh

West-Kalimantan South Sumatra

Brazil Mato Grosso

Activity profile

The IDH landscape approach is based on safeguarding natural resources in threatened tropical commodity sourcing areas by formulating and driving the business case for joint public-private landscape investment, and improving the enabling environment in which these investments are made. It is characterized by mobilizing multi-stakeholder landscape coalitions for collaborative action based on shared understanding, negotiation and

commitment to long-term land-use management objectives.

Our approach is centered around five pillars:

1) Green Growth Plans of multi-stakeholder coalitions;

2) Production-Protection Agreements;

3) Co-investment in scalable intervention models;

4) Innovative finance; and 5) Monitoring

Deliverables inception year

By the end of 2016 IDH and its partners will have established multi-stakeholder coalitions in the landscapes, drafted Green Growth Plans with supporting business cases. In the landscapes IDH and its partners will create the conditions for production-protection agreements and start piloting these. We will also have created the framework for innovative finance options and start building the monitoring framework.

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Context

Trends

Rising demand from growing populations and economies is putting ever greater pressure on natural resources. Of the current 7

¼

billion people on the planet about 12% go to bed hungry each day¹. It is expected that by 2050, agricultural output will need to increase by 60% globally, compared to 2005/2007ⁱ,to respond to the demands of over 9bn people²; projected population³,⁴.

At the same time agricultural development is the key driver of deforestation. Between 70 and 80% of deforestation globally of tropical forest is due to agricultural expansion. The latest report by the Intergovernmental Panel on Climate Change (IPCC AR5) states that of the 49 (±4.5) GtCO2eq emissions in 2010, 24% of total net emissions were associated to Agriculture, Forestry and Other Land Uses (AFOLU).

Forests, land use change and reduced deforestation are therefore part of a sustainable economic development agenda and contribute to poverty reduction (SDG #1), food

security (#2), gender equality (#5), responsible consumption and production (#12), climate action (#13), and halt land degradation and biodiversity loss (#15).

Over the next three decades, threats to food security will grow as the global population continues to climb, dietary preferences change, and the climate becomes more variable.

Other factors such as unclear land tenure rights, unsustainable land management practices and uncoordinated and often competing sectoral policies are contributing to competition and conflicts over land and its resources⁵. In this context, business-as-usual approaches to natural resource management constitute a threat to human well-being, security and sustainable economic growth. An additional approach is needed.

Weak governance

According to Forest Trends (2014), 49% of total tropical deforestation between 2000 and 2012 was due to illegal conversion for commercial agriculture. 24% was the direct result of illegal conversion for agriculture for export markets and 49% of all agricultural commodity products produced on illegally deforested lands were destined for export markets.⁶ These figures show that in order to address the issue of deforestation, governance is key.

The absence of proper land use planning and/or enforcement in the last few decades is a major obstacle to progress with commercial, conservation or community development objectives. The lack of proper land use planning does not directly cause land use conflicts,

1 http://www.fao.org/infographics/pdf/FAO-infographic-SOFI-2012-en.pdf

2 ESA

Working Paper, 12-03. Rome: Food and Agricultural Organization.

3 Vital Water Graphics - An

nd edition. Nairobi, Kenya: UNEP. ISBN: 92-807- 2236-0.

4Hoegh-Guldberg, O. et al. (2015) Reviving the Ocean Economy: the case for action. Gland, Geneva: WWF International.

5

Resources and Co Environmental Dimensions of Disasters and

Conflicts, 6. Nairobi: United Nations Environment Programme, and New York, NY: United Nations Department of Political Affairs.

6 Forest Trends (2014) “Consumer Goods and Deforestation”; also http://www.supply-change.org/

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but it contributes to an environment in which land use practices, land rights and future plans are not transparent and agreed, so they become highly contested.

At national level, policies and laws for the sustainable management of forested land exist, but implementation is very difficult. The size of the challenge is often greater than the available capacity and resources. At the local level, implementation faces the key issue of balancing competing land uses and changing land use trends. The opportunity presented by working at landscape scale is that the area is small enough to be manageable, but big enough to achieve a significant impact.

Private sector commitments

A growing number of retailers, manufacturers, processors and traders in the food, fuel and fiber sectors are making public commitments to establish deforestation-free supply chains.

In addition, national governments are introducing procurement policies to purchase certified commodities. A few prominent ones are mentioned below.

New York Declaration on Tropical Forests (2014)

A non-legally binding political declaration signed by amongst others 34 companies, which includes the commitments to:

 At least halve the rate of loss of natural forests globally by 2020 and strive to end natural forest loss by 2030

 Support and help the private sector goal of eliminating deforestation from the production of agricultural commodities such as palm oil, soy, paper and beef products by no later than 2020, recognizing that many companies have even more ambitious targets

Tropical Forest Alliance 2020 (2012)

The initiative includes 19 companies as well as governments and non-governmental

organizations, which are dedicated to help achieve zero net deforestation in tropical forest countries by 2020.

Consumer Goods Forum (2010)

A coalition of 400 companies (retailers, manufacturers and service providers) across 70 countries with combined sales of 2.5 trillion euros. In 2010 the Board of Directors agreed on a resolution on deforestation and pledged to mobilize resources within respective businesses to help achieve zero net deforestation by 2020.

However, such demand side measures alone are insufficient to shift practice away from business-as-usual, and there is currently a major gap in translating these

commitments into actual impacts at the production level. For pledges towards

deforestation-free supply chains to deliver actual changes, demand side commitments need to be more clearly linked with actual changes at the production level.

Key private sector partners have therefore asked IDH to develop, next to a commodity value chain approach, a landscape approach to help address public good issues (like deforestation) that require interventions beyond the farm/plantation. A combination of private sector sustainable production with government enforcement to tackle (illegal) deforestation and sustainable land-use planning will create the basis for green growth at jurisdictional level.

Increased interdependence and the need for a landscape approach

Given that different land uses often rely on the same resource base, decisions made to

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improve output in a single sector without effective coordination with other sectors, can rapid expansion of oil palm has strengthened the national economy and brought many small producers out of poverty. However, this has also led to high deforestation rates, and conversion of peat swamps leading to loss of biodiversity, increased climate emissions and wildfires.

By taking into account the interactions between different sectors and stakeholders, rather than considering them in isolation, we are better able to maximize agricultural

productivity, improve livelihoods, and reduce the negative environmental impacts of deforestation and forest degradation. It will not be possible to sustain forests without considering how to meet the increasing needs for agricultural commodities. Nor can we promote agricultural intensification, without knowing the wider impact on the forests. This justifies the need to adopt a landscape approach when exploring and introducing

production-protection compacts to achieve both forest conservation and agriculture goals.

Addressing this challenge will require innovative, integrated solutions, including the development of improved technologies and policies that promote more ecologically efficient food production while optimizing land allocation for forest conservation and agriculture. It will also require innovative finance, to enable the massive investment required in agricultural intensification.

This proposal

In the current inception period proposal, IDH, the Sustainable Trade Initiative proposes to lay the foundation to:

 Help reduce deforestation from agricultural expansion in seven selected landscapes;

 Help address governance challenges in the balance between agriculture, forest and people through a multi-stakeholder approach.

And

 Prepare the ground for investment in agricultural intensification, conservation and landscape restauration;

 Introducing production-protection compacts for these investments to achieve both forest conservation and development goals.

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Approach

IDH programs

IDH accelerates and up-scales sustainable trade by building impact oriented coalitions of front running companies, civil society organizations, governments and other stakeholders that will deliver impact on the Sustainable Development Goals. IDH has gained an unique experience of building public-private coalitions to co-invest in impact and market oriented approaches.

IDH has been at the forefront of efforts to transform commodity markets to make them more sustainable. Since 2008 IDH has brought together governments, civil society organizations and privately owned companies in action-oriented coalitions that aim to achieve sustainable market transformation across 18 sectors. These coalitions formulate and drive joint investment programs combining public interests such as economic growth, poverty alleviation and sustainable development with private benefits such as security of supply and reputation management. Much of this pioneering work has focused on the formation of groups of committed frontrunner companies, using certification standards and labelling in combination with civil society pressure and public sector support to bring about changes. In all sectors IDH has engaged in the volumes of sustainably produced and traded commodities have increased significantly.

At producer level this has implied the internalization of externalities, for example in

relation to unsustainable exploitation of forest. When addressing this kind of externality, a broader approach is needed in order to avoid that success in one supply chain is offset by setbacks in another. Through the IDH ISLA (Initiative for Sustainable Landscapes) program funded by the Dutch government, IDH is working with local government units, private sector actors, NGOs and other entities to tackle sustainability holistically across various supply chains linked to particular geographic areas or landscapes - with a strong focus on the development of the business and investment case for the key relevant stakeholders

The IDH landscape approach

The IDH landscape approach is based on safeguarding natural resources in threatened tropical commodity sourcing areas by formulating and driving the business case for joint public-private landscape investment, and improving the enabling environment in which these investments are made. It is characterized by mobilizing multi-stakeholder landscape coalitions for collaborative action based on shared understanding, negotiation and

commitment to long-term land-use management objectives.

Our approach is centered on five pillars:

1) Green Growth Plans of multi-stakeholder coalitions;

2) Production-Protection Agreements;

3) Co-investment in scalable intervention models;

4) Innovative finance; and 5) Monitoring

Green Growth Plans of multi-stakeholder coalitions

If jointly working towards common goals, major stakeholders have significant leverage to conserve natural resources without compromising economic development. But this will be insufficient without development of a clear business case for stakeholders to work

together across commodities. If a clear roadmap for the landscape can be developed with all relevant stakeholders, and supported by an effective multi-stakeholder governance structure, including improved spatial planning, effective incentives and disincentives to change, and targeted support to relevant stakeholders using relevant instruments, IDH believes that the objectives of different stakeholders can be reconciled.

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Production-Protection Agreements

Under the business-as-usual scenario, there no strong links between production and protection. Monitored by international NGOs, international companies will stay away from HCV/HCS Forests. But farmers and communities have different incentives and government are all looking for livelihood/economic growth options. The agreements between

companies and farmers/communities/governments often provide for conservation of HCV/HCS forest surrounding arable land. Here is a clear win-win-win: unlocking

commercial gains for farmers by enabling intensification through best-practices using private capital, catalyzing economic development and job creation, and preserving highly valuable forest and/or peatland. To do so there is a need to:

a) Establish national frameworks/requirements for linking production with protection;

b) Establish production-protection agreements in practice, through detailed land use planning and negotiation between communities and companies, supported by civil society and governments;

c) Develop an intervention package that provides strong opportunities to improve

livelihoods on existing agricultural land, and thus provide alternatives to deforestation and a strong incentive to communities to agree to zero-deforestation options.

Co-investment in scalable intervention models

Mobilizing stakeholder to implement targeted interventions should be closely linked to the overall stakeholder engagement strategy developed to build a coherent and shared vision for the landscape among stakeholders. Based on this vision the appropriate number and type of landscape interventions is selected, co-financing mobilized and tested for the potential to scale-up.

Innovative finance

Within the landscapes, private sector and governments are looking to move to a farmer sourcing focus. The significant economic risks associated with the untested development of farms/plantations is for financiers, governments and companies a too precarious risk too bear alone resulting in them being unwilling to engage without sufficient initial concessionary funding support.

The key role of innovative finance is to catalyze production-protection style deals between financial Institutions, local authorities and the private sector companies. Due to the

financial attractiveness of its risk taking capabilities (i.e. willingness to provide unpriced first-loss cover) innovative finance will be able to instill its investment criteria related specifically to public good impact (not financial-return) in the deal. For a financial

institution, which typically provides risk at a market/return basis, it is a complex process to also be providing a product which is concessionary.

The innovative finance itself is also focused exclusively on a certain type of deal, i.e.

stimulating deforestation-free agro commodity development with companies, the

government and communities/farmers in the landscapes. This distinguishes it from a risk- advisory team of the financial institution are focused more broadly on deal flow across various sectors. This distinction should not be taken lightly considering both past

experience and also the complexity of overlaying a private sector funding agreement with a strong public sector environmental agreement and enforcement.

Monitoring

Robust monitoring and enforcement is essential. Productivity increase will mitigate expansion on forested and/or peat areas only when combined with robust monitoring, enforcement and market/financial incentives.

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An IDH-NICFI Partnership

The partnership

Norway has clear foreign policy objectives on climate change mitigation and rainforest protection. For years, the Norwegian government has been one of the leaders in the international community when it comes to creating agreements and policy instruments that can protect the climate as well as rainforest. REDD and REDD+ are examples of initiatives that have been supported by Norway.

IDH accelerates and up-scales sustainable trade by building impact oriented coalitions of front running companies, civil society organizations, governments and other stakeholders that will deliver impact on the Sustainable Development Goals. IDH, as outlined elsewhere in this proposal, is an actor that works with supply chain actors to internalize externalities and to address issues such as rainforest protection at a landscape level in a sustainable and market driven way.

Norway and IDH have for some time been discussing possible areas of collaboration, given Norwegian objectives when applied in rainforest landscapes. Key deliverables in this partnership will be related to:

 Green growth planning

 Production-protection compacts

By working with local government entities, local CSOs and (crucially) with the private sector, the balance between forest and agriculture can best be found, as well as sustainable protection that is not undermined due to opportunism and corruption. The complementarity in the IDH-NICFI relationship is partly technical, in relation to common objectives concerning rainforest protection. Complementarity is also partly linked to networks; for IDH Norway is already a crucial partner when it comes to building alliances and coalitions. In Indonesia and Brazil, IDH is already enjoying a productive working relationship with the Norwegian embassies, a relationship which is helpful when engaging national and regional authorities and local actors and also in terms of tapping into the technical expertise that Norway possesses. Concerning technical expertise and the mutual exchange of technical know-how, IDH would also envisage a strategic continuation and scale-up of the technical relationship that already exists between Norway and NICFI. An IDH-NICFI partnership as outlined in this proposal would further solidify these relationships and aspirations. This partnership would be a joint initial agenda towards further strategic collaboration.

Initiated by the Dutch Government and with an extensive network of private sector partners, IDH has established convening power to get committed coalitions together for significant production-protection deals in specific geographies. That ability towards meaningful, result-oriented impact programs, through our committed, but neutral

mandate, is what makes IDH an attractive partner. Our understanding of the private sector, our capability to bring them together, and in addition our capability to bring the

government and local government to the table as well, are additional attributes that IDH brings into a partnership. Furthermore, IDH has expertise and networks in sectoral change, is used to working with industry, and understands private sector and supply chains.

IDH has been in operation since 2008 with strong backing from the Dutch government, and with additional support from both the Danish (DANIDA) and the Swiss government (SECO). The ability of IDH to develop and drive programs, and maintain accountability and transparency towards our donors, is well established.

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Partnership inception period

IDH participated in the most recent NORAD call for proposal, with a proposal covering South-Sumatra and West-Kalimantan. During the course of 2015, at the request of NICFI, another proposal was shared with NICFI concerning Liberia. A key component of that proposal was the guarantee fund more details on that is outlined in the Liberia chapter of this proposal. Discussions also emerged between IDH and NICFI on potential collaboration in Mato Grosso and Aceh, although for these geographies no written proposal material has been exchanged between IDH and NICFI before now.

The current partnership proposal is a consolidation of all these discussions, and outlines work streams for seven landscapes: Three in Indonesia (Aceh, South Sumatra, West- Kalimantan), three in Liberia (North, West, East) as well as Mato Grosso. As proposal material has already been shared for Liberia (informally a proposal was shared but not clear that the analysis is more mature for these landscapes than for Mato Grosso and Aceh which are newer landscapes in terms of the discussion between IDH and NICFI. The

present proposal outlines all seven landscapes and the planned work-streams for all these landscapes, both in terms of narratives and result matrixes. However, the underlying analytic level of detail is greater for the landscapes were proposals have already been shared prior to the submission of the current proposal.

This proposals supersedes earlier proposals that have been submitted, in order to facilitate a strategic partnership between NICFI and IDH. The objective is to forge a long term partnership for a multi-year period, although the present proposal is limited to a more limited inception phase of 12 months. As outlined in the result framework of this proposal, our thinking is long-term. The result framework outlines long term outcomes, as well as targets that have been set for output indicators in order to show the progress after year 1.

A contract linked to this proposal would be for one year but longer term success in terms of achieving the outcomes would necessitate a partnership that goes beyond the inception phase.

In that context, IDH will in 2016 start working on a longer term proposal. This is also important in terms of the partnerships that are at country level. For Liberia, the longer term work stream would also critically depend on the risk sharing facility establishment.

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The landscapes

In 2016 IDH, in partnership with Norway, will work in seven landscapes across three

continents. All seven landscapes are sourcing areas for multiple agro-commodities, harbor home to (indigenous) communities who depend upon natural resources for food and income-generation.

While developing economically, these landscapes face significant social and environmental issues and concerns that would benefit from a cross-sectorial, multi-stakeholder landscape approach that marries production and protection. At the same time the seven landscapes are significantly different in terms of geography, biome, size and commodities - creating an inspirational, challenging and diverse program portfolio. The seven landscapes were selected based on these main criteria:

1. Presence of relevant socio-economic & deforestation landscape risks related to development and opportunities to achieve impact in those areas;

2. Presence of a (potential) multi-stakeholder process, with local/national government, private sector, civil society, farmers and communities;

3. Relevance of landscape for supply chains: business interest in landscape approach and appetite for co-funding of landscape interventions;

4. Opportunity to combine conservation efforts with improved agricultural productivity increases;

5. Added value of IDH and its partners: status and plans of existing initiatives, possible synergies.

Table 1: Green House Gas emissions profile for the landscape countries⁷

Country Energy sector AFOLU

Liberia⁸ 67.5% Considered a carbon sink

Indonesia 66% 25%

Brazil 37% 56%

The following seven landscapes have been selected in 3 countries:

Liberia

North Liberia.

The landscape is centered on the Arcelor Mittal mining concession, which is located in the

northern point of Nimba co . The Nimba mountain

range dominates the area and is a protected area, because of its unique montane ecology.

In and around the concession there is dense forest, including a second (proposed) Nature Reserve and several community forests. Compared to the palm oil landscapes described below this is a relatively small area of approximately 125,000 ha. and a population of 30 - 40,000. The area can become a showcase of a mining concession landscape that

forest conservation and restoration.

7 Annex 1 countries: https://unfccc.int/ghg_data/ghg_data_unfccc/ghg_profiles/items/4625.php

8 http://unfccc.int/resource/docs/natc/lbrnc1.pdf

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West Liberia.

In West Liberia, the proposed landscape is centered on the palm oil and rubber concession area held by Sime Darby. This lies in the north-west corner of the country, towards the border with Sierra Leone and extends to an area of 311,187 ha. across four counties; Grand Cape Mount, Bomi, Bong and Gbarpolu. The landscape includes a complex mix of

community land use for farming, hunting and other subsistence uses; local commercial agriculture, and other concessions for forestry and mining. It includes substantial areas of dense rainforest and is surrounded by protected areas and proposed protected areas. It would benefit substantially from production-protection agreements between communities, government and companies that allow for development while safeguarding the forest.

East Liberia.

The proposed landscape in south and east Liberia is centered on the palm oil concession held by Golden Veroleum Liberia (GVL). The concession stretches over five counties: River Cess, Sinoe, Grand Kru, Maryland and River Gee, but the suggested landscape is within the boundaries of the latter four counties. A boundary encircling the three main blocks of concession land encloses an area of approximately 1.6 million ha. and a rich mixture of concessions, conservation areas and communities. In conservation terms, the north-east part of the landscape represents an aspiration to protect a chain of protected areas and connecting corridors that stretch from the coast of Liberia northwest and over the border into (The Tai-Grebo-Sapo complex). Like the North West landscape, it would benefit substantially from production-protection agreements between communities, government and companies.

Indonesia

The province of West-Kalimantan.

Within the province of West Kalimantan, the selected landscape comprises the three districts of Ketapang, Kuburaya and Kayong Utara in the southwest of West Kalimantan. It spans an ecological gradient including coastal mangroves, peatlands, and lowland forests containing at least nine distinct ecosystem types and the largest area of unconverted deep peat in the province. Agri-commodity cultivation, mainly oil palm and wood fiber,

contributes to economic development in West Kalimantan and is linked to pledges on zero net deforestation of Consumer Goods Forum Companies and Tropical Forest Alliance 2020 members. However, policy incentives to encourage commodity growth and the growing industry demand for land, in combination with weak environmental and social safeguards, are putting the landscape and communities living in the landscape at risk. A balance between forest, people and economy needs to be struck.

The province of South Sumatra.

The province of South Sumatra is a significant source of commodities including palm oil, pulp and paper, pepper, rubber and coffee. While commodities production forms an

important component of the provincial economy this prosperity is also being accompanied by environmental challenges - the province is estimated to have lost 130,000 hectares of primary forests since 2005 (Global Forest watch data). The Bukit Barisan National Park listed as one of the 200 most bio-diverse and important ecoregions on Earth and home to critically endangered species such as the Sumatran elephant, Sumatran Tiger and

Sumatran rhino - is considered under pressure from encroachment and illegal conversion.

The governor of the province wants to part with IDH to work towards Green Growth that combines economic development with safeguarding forest and peat areas.

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The province of Aceh.

Focus of the interventions is on palm oil, in partnership with the Indonesian palm oil pledge (IPOP) companies in and around the Leuser Ecosystem covering an estimated 2.3 million hectares, mainly in Aceh with some extension into North Sumatra (for comparison, the province of Aceh covers 5.7 million hectares). IDH and its partners have identified more than 30 palm oil mills within 50 km of the ecosystem boundary. The work will focus on making the pledges on deforestation help small holders apply good agricultural practice and maintaining the forest. This requires a coordinated effort between government, companies and communities.

Brazil

The state of Mato Grosso.

Mato Grosso is an important region for the production and sourcing of soy, corn, cotton and beef. At the same time, Mato Grosso harbors large tracts of the Brazilian Amazon forest, Cerrado and Pantanal ecosystems that have seen major conversion rates over the past decades. Beef and soy farmers, the top 4 global commodity traders, the Mato Grosso government, Consumer Goods Forum Companies, Tropical Forest Alliance 2020 members and NGOs are all interested in mainstream, scalable solutions for regulatory compliance, HCVA connectivity and intensification of agriculture. Some of these players have started to develop individual solutions, whereas working cross-sector at a landscape level can be beneficial to all and that is what the program will focus on.

Partners

In order to implement this program IDH will work together with many stakeholders at landscape, national and international level. The role of IDH is to convene, broker, provide knowledge, guidance and expertise. For the implementation IDH will work closely with Implementing Partners (IPs) as IDH does in all its programs. IPs can be NGOs, companies and knowledge/technical partners and in the case of governance/enforcement also the government. Consultants will also support for the research and development related activities, to complement the expertise, network and experience of IDH and its partners.

For the inception year IDH will leverage its existing IP network in the 7 landscapes, making sure the program is locally owned and executed. By working with its IPs, there is a mutual knowledge and capacity transfer between the partners and IDH.

The program is designed as such that it will strengthen existing work and experience and address gaps as identified by the partners on the ground, not duplicate. From the outset the governance and implementing structures are designed with local ownership in mind.

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Liberia

Project location

In the inception year, the program will set up and start activities in three landscapes in Liberia. The landscapes are centred on large land-use concessions (Figure 1):

 The iron-ore mining concession held by Arcelor Mittal Liberia in the north east of the country with an area of 84,500 hectares (845 Km²) relevant to its offset biodiversity conservation program;

 The agricultural concessions of Sime Darby Plantation Liberia (SDPL) in north west Liberia, a gross concession area of 311,000 hectares (3,110 km²), predominantly for oil palm and rubber plantation; and

 The agricultural concession of Golden Veroleum Liberia (GVL) in south west and south east Liberia, a gross concession area of 350,000 hectares (3,500 km²), for oil palm plantation.

Figure 1: Landscape areas (marked by red dotted line) in Liberia.

Source: Adapted from maps produced by Fauna & Flora International

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Figure 2, here below, provides an overview of the key features of the selected landscapes.

Figure 2: Key Figures of the selected landscapes

North mining landscape

• Landscape linked to mining of approximately 84 500 ha

• Area includes other mining and forestry activities

• Estimated 30 000 ha of high value forest under threat.

• Population within concession with land ownership land use rights and dependent on forest resources.

• Commitment by Arcelor Mittal to the long-term development of the area and to forest conservation as compensation for its mining impact.

• Experience of community engagement, land-use planning and developing conservation agreements.

West oil palm landscape

• 311 000 ha gross concession area.

East oil palm landscape

• 350 000 ha gross concession area.

• Estimated 120 000 ha of HCV forest in each (Western and Eastern)concession and protected areas or proposed protected areas in close proximity.

• Overlapping forestry and mining concessions, plus artisanal mining, informal logging and other commercial land uses.

• Large population of communities with land ownership and land use rights, depending on forest land for food and livelihoods.

• Multi-million dollar commitment by companies and ambitious plans for development.

• Commitment to international standards for forest conservation (HCV and HCS).

• Actively engaged in mapping commercial, community and conservation qualities in concession area and brokering land use agreements with communities.

Main impact areas and outcomes

IMPACT AREAS ADDRESSED BY PROJECT

Natural forests are conserved to maintain their carbon storage capacity and

biodiversity

180,000 hectares of high conservation value and high carbon stock forest is covered by production-

protection agreements

Cost effective and verifiable reductions in greenhouse gas emissions from deforestation and forest degradation.

TBD

Sustainable development

Expansion of up to 35,000 hectares

community palm oil production

Poverty reduction

Improved livelihoods for smallholders in 60

communities, benefitting 4,200 households and 21,000 household members.

PROJECT SPECIFIC OUTCOMES

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1. Commercial, community and conservation interests are addressed in a Green Growth Plan, executed by public-private partners in the three landscapes.

2. Production-protection agreements between companies-government-communities in the three landscapes, contributing to reduced emissions from deforestation and forest degradation.

3.Risk sharing facility for investment in community palm oil production

4. Improved (food)crop production/diversification activities by community members to improve livelihoods.

5. Conservation, social and commercial outcomes are verified through a robust monitoring and reporting process.

Identification of changes required

The project builds on existing institutions, processes and methods but nonetheless involves a substantial scaling-up of activities in the landscapes and the introduction of some new aspects.

Four core innovation aspects of the multi-year proposal are:

I. Landscape scale focus: Land use planning for community, commercial and conservation goals involving the key stakeholders at a landscape level;

II. Production protection agreements; Production protection agreements for green and inclusive growth; Production-protection agreements that bring both

agricultural and forested land under sustainable management agreements, to be signed by government, palm oil companies and communities; The production protection agreements are incentivized by agricultural intensification support and opportunities for oil palm out growers.

III. A risk sharing facility; To enable investments in oil palm out growers in Liberia, a facility will be developed that supports investors in this high risk space by taking the first loss.

IV. Forest monitoring and enforcement of forest conservation policies;

I. Landscape scale focus. The shift of focus onto a landscape scale is an important part of the theory of change in this project, as the many commercial, conservation and community issues in and around the forest do not operate or exist in isolation. The opportunity

presented by working at landscape scale is that the area is small enough to be

manageable, but big enough to achieve a significant impact. Large concessions are the closest example there is in Liberia to a landscape approach. The oil palm and mining concessions that are at the center of this project are necessarily dealing with commercial, conservation and community issues. The successful development of concessions

necessarily requires the simultaneous achievement of commercial, community and

conservation objectives. Concession holding companies have the biggest stake in making this work, and are already on the ground leading or supporting the practical work.

The absence of proper land use planning in the last few decades is a major obstacle to progress with commercial, conservation or community development objectives. The project aims to change this situation by expanding and accelerating the mapping and planning work that has been done by the companies, including plantation development, smallholder production and forest conservation.

II. Production protection agreements for green and inclusive growth; Under the business- as-usual scenario, there are no strong links between plantation and smallholder production, and the protection of forests. The project will contribute to the national initiative to

establish an out grower model led by NBC and delivered by GROW to establish this link, through the development of production protection agreements including detailed land use

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planning, negotiation between communities and companies and supported by civil society and government, and an intervention package that provides strong opportunities to improve livelihoods on existing agricultural land, and thus provide alternatives to

deforestation and a strong incentive to communities to legally agree to zero-deforestation options.

III. A risk sharing facility that enables palm oil outgrowers investment; The key change in the strategy of the oil palm concession holding companies in the project is their shift towards out grower models and community empowerment. This shift requires significant investment in small holder producti

grower palm oil programs carry high investment-risks of farmer/community default and international palm oil companies are inclined not to invest in an out grower model themselves, without the ability to share these risks with others specifically the Liberian government, donors, and development financial institutions. The project envisions to develop a Risk Sharing Facility to overcome this barrier.

IV. Stronger regulation, governance and forest monitoring. Incentives will not result in land use change unless they are accompanied by dis-incentives for practices that cause

deforestation and forest degradation. Indeed economic development will increase consumption and hence put further pressure on the forest. The project will provide additional capacity to FDA and it will encourage compliance by bringing the various different interests together in a landscape partnership.

Year one focus

While the de-risking facility is being considered by the Government of Norway and a final decision is expected on the facility in June 2016, a work plan for the inception year has been developed.

In the inception year, the program will lay the foundation for effective program

management and convene the key stakeholder in the landscapes as well as nationally. In the mining landscape, the inception year will prepare the ground for robust community conservation schemes on the basis of production and protection, and in the two palm oil landscape, the inception year will also contribute to preparing the ground for investment and support the first out grower based planting cycle in pilots in the two palm oil

landscapes. In addition, a detailed proposal for the further role for the project in 2017- 2020 will be set up, or alternatively a plan for a responsible exit during 2017 will be developed.

The proposal for the inception year details out the activities and output indicators for 2016.

The activities are clustered into the following five work streams:

1. Program Management.

2. Convening multi stakeholder coalitions at pilot level, landscape level and national level.

3. Land scape and stakeholder mapping.

4. Developing models for piloting

a. production protection agreements, b. out growers (operational and financial), c. farmer field schools.

In the annex of the proposal, we also refer to the long term outcomes outputs and the year 1 activities and targets.

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Timing of Activities

The activities are clustered into the following work streams:

1. Project management 2. Convening

3. Diagostic studies and mapping 4. Model development

See the table on the next page for detailed activity planning in Liberia.

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ACTIVITY PLANNING LIBERIA

jan feb Mar apr may jun jul aug sep oct nov dec Program Management

Recruitment of program project manager, program officer and landscape conveners in Liberia.

Developing skills and capacities of landscape conveners and program manager, involving the FDA

where appropriate and feasible

Elaborate program management structure with FDA, and other key program stakeholders.

Design monitoring, evaluation and reporting arrangements.

Develop program learning agenda in close consultation with key stakeholders.

Develop a leveraged communications strategy, internationally and nationally, including development

of communication and outreach partnerships, positioning strategy, program 2pager, newsletter, etc.

Convening

Stakeholder mapping in three landscapes;

Building the landscape coalition; identification of key stakeholders, bilateral meetings, engagement plan, convene meetings, support discussion on developing a joint vision. In the mining landscape, emphasis may be on develop endowment fund option for mining landscape

Building (on) a national dialogue for production protection finance

Supporting or convening the key stakeholders around the identified pilot sites in the two palm oil

landscapes

Scenario building for the 3 landscapes: 'business as usual' and green growth scenarios

Mapping

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Identification of target area (x ha) for pilots with out growers, HCV-HCS forest and target

communities.

Research and analysis of data sets relating to the pilots, identify knowledge gaps on pilot sites related

to eg. biological, social and economic baseline studies, commission additional studies where needed.

Discuss outcome of technical studies with key stakeholders to map out ha to be planted and number

of hectares of forest to be protected within pilots.

Model development

Develop production-protection proposition for the pilots; define number of hectares of forest to be

protected per pilot.

Learn from existing conservation agreements in the mining and palm landscapes.

Contract a consultant to provide lessons learned on production/protection from other localities.

Series of meetings and workshops to discuss needs and merits production-protection model, and

roles FDA and other key government bodies.

Drafting of pilot production-protection agreements, in close consultation with key stakeholders,

including communities in the identified pilot out growers areas and in adjoining HCV-HCS forest.

Support development of outgrower model by Grow coalition

Design (including governance) Risk Sharing Facility for investment in outgrowers

Fundraising for RSF to meet required outstanding capital requirements for outgrower expansion in the period after 2016.

Overview of economic opportunities that can be developed in relation to protection agreement

around the pilot sites

Research and economic analysis to identify cost-effective interventions for reducing deforestation

and degradation arising from community forest-uses.

Develop partnership with ministry of Agriculture and additional partners (to be defined and recruited)

for developing and initiating farmer field school curriculum.

Develop model for farmer field schools for pilot sites in the palm oil landscapes

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Organizational arrangements for project implementation

The project requires a solid project management structure, as well as a solid multi stakeholder board and multi stakeholder platforms or coalitions at all relevant levels to ensure participation and buy-in of key stakeholders. IDH has strong experience in

developing such multi stakeholder decision- and governance structures, both in its supply chain programs as well as at the landscape level. Based on this experience, we propose a general structure for implementation of the project as shown below. The exact

composition and functions of the partnerships/coalitions will be decided by the participants during the inception period. Existing governance and implementation arrangements will be used where they are fit for purpose.

Figure 15: Implementation arrangements

Program management

The table below provides a detailed overview of the activities that are foreseen in the inception phase related to building the project team and operational structures and frameworks. These activities together will lead to achieving output 1.3 of the multi-year proposal, ( 1.3 Project management teams to manage and implement landscape activities on behalf of the partnerships.).

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In the inception year, initial focus will be on recruiting the program manager, who will be based in Monrovia. Starting Q2 of the inception year, recruitment of the landscape

conveners will start. We will invest in furthering skills and capacities of the recruited team by including them in the ISLA landscape convener learning days⁹.

Starting the second quarter, we will finalize the project management structure, including a strong role for the FDA as a project partner, and partnerships with other organizations, such as GROW, will be made formalized through MoUs or other means.

Throughout the inception phase, as the approach of this Liberia Green Growth initiative is innovative with its explicit focus on production protection agreements, we will invest in a strong M&E framework to be able to measure outcomes, but also developing strong learning partnerships and developing a communications strategy, tools and partnerships.

Our approach for learning, M&E and communications is elaborated on in the respective chapters on those subjects in this proposal.

First year activities First year deliverables

Recruitment of program project manager and landscape conveners in Liberia.

Project team in Liberia in place.

Elaborate program management structure with FDA, and other key program stakeholders.

Program management structure in place.

Design monitoring, evaluation and reporting arrangements.

Program reporting, evaluation and reporting arrangements in place.

9 Through its ongoing landscape program, the IDH Initiative for Sustainable Landscapes, IDH hosts semi-annual Landscape convener learning days, during which the landscape conveners from six landscapes in Brazil, Indonesia, Vietnam, Ivory Coast, Kenya and Ethiopia from come together for training and exchange on approaches and lessons.

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Indonesia

Project Location

The project is located in three provinces in Indonesia: Aceh, South Sumatra and West Kalimantan. Within the provinces, specific landscapes have been selected.

Aceh

The Leuser Ecosystem covers an estimated 2.3 million hectares, mainly in Aceh (covering 13 districts) with some extension into North Sumatra (for comparison, the province of Aceh covers 5.7 million hectares). The Mount Leuser National Park fits within the ecosystem and is a formally protected area covering approximately 800,000 ha. Other areas of the ecosystem are under varying forms of protection but which are less stringent than national park status. In recent years, the Leuser Ecosystem has become particularly high-profile through the publication of a variety of reports such as The Last Place on Earth (Rainforest Action Network) and numerous reports by Greenomics Indonesia and

Mongabay.

Figure 1: Location of Aceh area highlighted in red (source: Google Maps)

IDH and its partners have identified more than 30 palm oil mills within 50 km of the

ecosystem boundary. These mills are predominantly single site operations or are owned by small-medium size companies. Most are highly reliant on smallholders and outside crop and may be facing supply constraints or competition for supply. In some cases, mills have planned or begun expansion into nearby forest areas after having obtained all of the necessary legal permits and documentation. In other instances, forest encroachment is occurring illegally.

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Figure 2: Leuser Landscape Surrounded by Palm Concessions (source: Google Earth)

The province is semi-autonomous as a result of civil conflict which came to an end in 2004. Aceh is led by Governor Dr. H. Zaini Abdullah who was elected in 2012 for a five-

sk Force (GCF) and signed an MoU with BP REDD+ in 2014 to implement a REDD+ approach before the BP agency was dissolved some months later. The province has recently also established a Green Caucus, in which members of parliament show strong support for sustainable development and the provincial parliament created the Leuser Ecosystem Management Agency (BPKEL) in 2006 to address the specific challenges in the area (since disbanded). However, the government has also been under pressure to allocate land to former fighters in the separatist conflict as part of the settlement agreement, and the 2014 draft spatial plan for the province was heavily criticized in The Last Place on Earth.

Interventions in Aceh will be based on improved spatial planning with regards to the Leuser Ecosystem. Focus of the interventions is on palm oil, in partnership with the Indonesian Palm Oil Pledge (IPOP) companies.

South Sumatra

The province of South Sumatra is a significant source of commodities including palm oil, pulp and paper, pepper, rubber and coffee. While commodities production forms an important component of the provincial economy, this prosperity is also accompanied by environmental challenges - the province is estimated to have lost 130,000 hectares of primary forests since 2005 (Global Forest watch data). The Bukit Barisan Selatan National Park listed as one of the 200 most bio-diverse and important ecoregions on Earth and home to critically endangered species such as the Sumatran elephant, Sumatran Tiger and Sumatran rhino - is considered under pressure from encroachment and illegal conversion.

The situation is also similar in Sembilang National Park, Dangku Conservation area,

Harapan Rainforest, Padang Sugihan sanctuary and other forested areas in South Sumatra.

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In addition, forest fire is an unsolved problem in South Sumatra with hundreds of hotspots occurring this year alone. Peat fires in dried-out peatland in the region are the core of the problem. Past experience has shown that the predominant causes of forest and land fires in the region are human-induced fires. Although fire uses for human activities on a given piece of land are normally based on the locally existing standards and regulations, controlling an escaped fire that might lead to a large scale and devastating uncontrolled fire is not an easy task. Over the last two decades this situation has been exacerbated, as most dry area tend to become more susceptible to fire when a prolonged extreme dry weather like El Nino occurs with a decreasing time interval.

In response to those challenges, Governor Alex Noerdin has played a leading role in seeking opportunities to align environmental and economic outcomes, initially positioning the province as an early adopter of the REDD+ mechanisms developed under the BP- REDD+ and more recently seeking to broker agreement between central government, companies, environmental groups and civil society on a revitalized development plan.

(Kemitraan Pengelolaan Ekoregion dan Lansekap Sumatera Selatan - KPEL-Sumsel) as a public-private-people partnership to enable the province to achieve the dual goals of inclusive economic growth and environmental protection. This is also in line with the provincial commitment to implement its own greenhouse gas emissions plan (RAD-GRK) and the Bonn Challenge on land restoration.

Recognizing the important role that palm oil plays in the prosperity of the province and the conservation of forest and peat, the Governor has invited IDH to lead private sector convening towards an effective Green Growth Plan with a production-protection strategy, building on existing partnerships and linkages with companies including Cargill, Musim Mas, London Sumatra (Indofood Group), Makin Group and Wilmar.

Figure 3: South Sumatra Landscape highlighted in red (source: Google maps)

West Kalimantan

West Kalimantan covers an area of 14.7 million hectares and consists of diverse

ecosystems ranging from peat lands to coastal mangroves to forests. These ecosystems are home to many endemic species such as orangutan, as well as a source of water, fire and flood control and microclimate regulation. Previous work within the IDH Initiative for Sustainable Landscapes (ISLA) in 2015 has led to the selection of a focus area of 2 million hectares, including large parts of the districts Kubu Raya, Kayong Utara and Ketapang.

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The landscape stretches across an ecological gradient of coastal mangroves, peat lands with critical peat domes, and lowland tropical forests containing at least nine distinct ecosystem types (representing nearly every type of vegetation in Borneo) and the largest area of unconverted deep peat in the province. The selected landscape is home to the Gunung Palung National Park, a 90,000-hectare protected area located in Ketapang and Kayong Utara districts. In addition to being one of the most complete National Parks in Borneo, it is also a United Nations Great Ape Survival Project conservation priority area.

The national park is home to an estimated 2,500 Central Bornean orangutans.

Indigenous people living in the landscape base their livelihoods on rice farming and

agroforestry. Upstream forest ecosystems help provide clean water for local communities, and flood control to downstream communities.

Approximately 1 million hectares of the selected landscape are still covered with forest (primary, secondary, logged) and 560,000 ha of the landscape is peat land. Like South Sumatra, West Kalimantan has many fire hotspots occurring this year. The origins of the problem are similar: human-induced fires escaping on dried-out peatland.

Figure 4: The red lines show the borders of the three districts, the white line inside West Kalimantan shows the boundary of the selected landscape. (source: Google Earth)

Approximately 100,000 hectares of forest are covered in national parks, and 230,000 ha of forest is designated as protected, although in reality both forms of protection do not guarantee that part of the areas have not been deforested or degraded yet. It also implies that the majority of the remaining forest is located on land designated to some form of production (from agricultural land to different types of production forest).

The province that is led by Governor Cornelis is an active member of GCF and also had prepared a REDD+ approach at provincial level before the Indonesian REDD+ agency dissolved. Economic development of the province is driven by agro-forestry commodity production, mainly oil palm, rubber, timber and wood. Communities are furthermore dependent on small scale agriculture and non-timber forest products such as illipe and rubber.